I had a conversation with Michael Stollar, President and COO at HMSA, about the outlook for 2017 for the organization. He shared some candid thoughts on the questions for the market ahead of the ACA “repeal and replace” strategy, on the payment reform in Hawaii, and on the workplace culture at HMSA.

DJ: This might be the toughest question to start with or maybe the easiest, but as a prominent plan in a state market, how are you thinking about and responding to the “repeal and replace” conversation taking place in Washington DC?

MS: Well as you say, this might be the toughest and the easiest to answer. We’re not taking anything for granted. I guess the safest thing for us to do is to plan for the worst, and to try to come up with strategies that, regardless of what happens, we’re prepared to move forward. As we look at the possibilities that could arise, we remain convinced that the pathway we’re on is the best for the state of Hawaii and its people.

Ultimately, improving the health of the overall population is the only long-term answer to sustainability.

DJ: If Congress repeal’s some of the ACA, maybe keeps the provisions related to consumer protections and the individual mandate, but drops the subsidies, how will that impact HMSA?

MS: The question will be assuming that pre-existing conditions stay in, the insurance reforms, no subsidies, HMSA will have to assess whether we’ll stay in the marketplace. And there certainly are a number of rumblings that this will be too great to overcome financially.

Maybe more importantly, we think that there is a threat to pre-paid health care law here, and we don’t think a lot of people see that yet.

DJ: Interesting. So, assuming Congress allows selling across state lines, you think that will undermine the pre-paid health care model in Hawaii?

MS: It depends. It depends on the nuance of which state has the primary regulatory enforcement responsibility and it really comes down to which state’s rules and regulations apply. We have some folks promoting states rights, and some pushing a more free market, multi-state approach. But, depending on what Congress comes up with, I think it’s possible that there will be a rush to states with loose or minimal standards, where plans could then sell into Hawaii from those states, and we’ll see a race to the bottom.

DJ: Tell me how the move to capitation is going generally. But, I’m specifically interested in the cultural obstacles that HMSA has faced and overcome related to plan and provider relationships, and those that HMSA has yet to overcome as it moves providers to a capitated payment model.

MS: I’m not sure they (the obstacles) are cultural relative to the state, per se. It’s been a great experience for HMSA and the physicians involved in the pilot. If for no other reason, it’s opened up tremendous lines of communication and feedback that weren’t necessarily there before.

For those that embrace it, and take advantage of the resources available to them, the feedback has been tremendous. It’s changed the way they practice, it’s changed their lifestyle. They have more time for patients, more time with their teams. I hear pediatricians are texting with their teens and meeting them at Starbucks.

At the other end of things, we’ve had physicians that have struggled managing a monthly payment at the beginning of the month even though it’s the exact same as they would receive otherwise, but there are changes that have to be thought through.

One of the challenges around payment transformation is building the ecosystems of support for the physicians. This is proving to be really important, and while aligning the payment system is great it will take a lot of resource and partnering to make sure that happens. So, that’s really a key for us and the physicians organizations; to make sure this happens in a positive manner.

We’ll be spending a lot of time and money on building that.

DJ: It doesn’t strike me that the conversation about repeal of the ACA will impact any of that directly.

MS: We’ll have a challenge if we go to block grants, or if dollars are cut back in any form, the expansion shrinks, or if the ACA individual market shrinks, we’ll have a challenge. And it’s a financial challenge for the entire state. We’ve already begun the conversation here with other stakeholders, state departments, even other health plans, about what we may need to do as a community. And we really do have a sense of community here.

Being isolated does have its upside. And being an island state does mean we have a community feeling here that may allow us to solve our challenges in new and innovative ways.

DJ: I understand that folks that might lose coverage won’t have money to cover their care, but do you think your payment model is under threat if the ACA is repealed?

MS: I don’t think so. I think we’ll keep going. I think actually it makes even more sense to keep going. I think going back to a fee for service system will deteriorate things even more quickly.

DJ: Tell me how you would characterize HMSA as a place to work? What’s the culture like inside the company? Give us a window into HMSA.

MS: It’s incredibly mission-driven. People here believe in the mission of improving health, making health care accessible and affordable. . The people we work for are our neighbors, our families, our cousins. Everything is one degree of separation here. So our mission is very personal. And that’s a great environment to work in.

It’s been a great place for me to be for the last 30 years. I’ve had a family and a career. It’s been very friendly in that regard.

I would say we are a company in transition. And that is always difficult. We have large sections of our company that are very used to the traditional approaches of being a health insurer. And we have an emerging and growing part of our company that is really trying to become more of a health organization. And that transition is hard for everybody. Everyone wants to be sure they see their place in that and to see how the work they do ties in. So we’ve got a lot of change going on. Things are moving so quickly here that it’s a constant stress and challenge for us.

MS: Our payment transformation plan in 2017 is to continue to expand the primary care role out and to begin to engage the specialists and the facilities.

With our specialists, we’ll focus on a number of things, but probably the first is to focus on bundled episodes of care. We have 5 or 6 possibilities that we’re looking at there.

With the hospital systems, we have a number of ideas. But the main thing is that we’ll put a process in place that will allow us to do it all together.

We are unlikely to have a singular model with our hospitals because they are so varied in what they do and how they do it. So I can see us having 3 or maybe 4 models of engagement with our hospitals, depending on whether you’re a highly capitalized system in Honolulu, or the middle ranged systems on the neighbor islands, or the safety net hospitals in rural settings.

It’s a little hard to say what these things will look like but I think we’ll get a pretty good picture as we get to the end of 2017.